We explain what economic power is, its characteristics and examples. In addition, we tell you how it is related to political power.
What is economic power?
The economic power It is the degree of influence that the accumulation of capital in private hands creates in society that is, the power that large economic actors have, because their financial and commercial decisions have a notable impact on the quality of life of numerous people.
When talking about economic power Reference is usually made to large companies or economic groups that, within the framework of consumer society, they are an influential actor, capable of putting pressure on others and looking after their own interests. In the economic sphere, however, it is common for the term to be applied also to the purchasing capacity of individuals that is, to its consumption capacity.
In any case, economic power is a direct result of the accumulation of capital. When a group of people manages a large amount of economic resources (goods, capital, means of production), they tend to exert an influence on the rest of the social and political actors, given that their role within the economic chain is decisive.
For example, a group of financial companies, which manages a lot of money, can make large donations to the electoral campaign of candidates of their choice, thus giving them an advantage over others and facilitating their rise to political power. In this way, their economic power can also be converted into political power or political influence.
See also: Power
Characteristics of economic power
In general, economic power is characterized by the following:
- It originates in the accumulation of economic resources such as income and capital.
- It can influence or interfere with other spheres of daily life such as social, political or cultural.
- It is usually found in the hands of private economic actors.
- It differs from political power in that it was not institutionally conferred, that is, it was not given to the person who has it by any institution.
Examples of economic power
Some examples of manifestation of economic power are:
- The rise of the bourgeoisie as the dominant social class at the end of the Middle Ages replacing the aristocracy, since it was the bourgeoisie (merchants, businessmen and financiers) who accumulated monetary wealth.
- Financing of medical research by large companies American tobacco companies during the 20th century, to try to deny the carcinogenic effects of cigarette consumption and protect their sales.
- The cases of dumping or extreme lowering of a company's prices to make competition from others impossible and end up with a monopoly on the market.
Economic power and political power
Economic power (that of capital) and political power (that of institutions) ideally constitute two entirely different forms of power. Political power is given to certain actors (political parties, public officials, delegates, among others) through institutional mechanisms (voting, in democracies, tradition in monarchies) and its exercise occurs within a pre-established regulatory framework. Instead, Economic power is a product of the concentration of wealth and does not come, in that sense, from the dynamics of public affairs.
However, the political and economic power often form ties with each other, whether legal or illegal (corruption). It often happens that those who hold political power gain access to shares of economic power (that is, they become rich), as well as that those who hold economic power influence the running of the country. To prevent said association from privileging private interests over the common well-being, the laws contemplate codes, prohibitions and regulations that seek to preserve political exercise as independent as possible.
References
- García Cousin, K. (2013). “Relationship between political power and economic power in the work: The Prince by Nicolás Machiavelli.” InterSedes. vol. 14, no. 27.
- Segurado, JA (2002). Economic power and political power. The Country. https://elpais.com/
- Siniscalco, P. (2022). The power of economic groups. Seven3Seven. https://revista.suteba.org.ar/
